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Report: Simon may drop General Growth bid

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Shares in General Growth Properties Inc., the second-biggest U.S. mall owner, fell as much as 6.7 percent in New York trading Monday morning after a newsletter report that Simon Property Group Inc. may abandon a takeover bid for its smaller rival.

Indianapolis-based Simon is unlikely to move ahead with its buyout offer because of antitrust concerns, the REIT Newshound reported Sunday night, citing sources it didn’t identify. Simon has concluded that an attorney for Chicago-based General Growth who handles antitrust issues wasn’t dealing in “good faith,” the newsletter said, citing one of the sources.

Simon spokesman Les Morris and General Growth spokesman David Keating didn’t immediately respond to requests for comment.

General Growth fell 4.1 percent to $16.05 as of 11:49 a.m. in New York Stock Exchange composite trading, and sank to as low as $15.61 earlier MOnday. The shares have jumped 71 percent since Feb. 15, the day before Simon made public a $10 billion offer to buy the company out of bankruptcy. General Growth dismissed the bid as too low and instead plans to exit bankruptcy with financing from a group led by Brookfield Asset Management Inc.

“GGP shares were priced based on some sort of topping from Simon,” said Benjamin Yang, an analyst with Keefe, Bruyette & Woods in San Francisco. “Based on this news, it seems less likely that Simon will come back with an offer higher than the $15-a-share proposal from Brookfield.”

General Growth filed the biggest real estate bankruptcy in U.S. history almost a year ago after amassing $27 billion in debt making acquisitions. Simon’s bid would have given equity investors about $9 a share and paid unsecured creditors in full.

Simon has been preparing a new offer for General Growth, a person with knowledge of the plan told Bloomberg News last month.

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  1. PJ - Mall operators like Simon, and most developers/ land owners, establish individual legal entities for each property to avoid having a problem location sink the ship, or simply structure the note to exclude anything but the property acting as collateral. Usually both. The big banks that lend are big boys that know the risks and aren't mad at Simon for forking over the deed and walking away.

  2. Do any of the East side residence think that Macy, JC Penny's and the other national tenants would have letft the mall if they were making money?? I have read several post about how Simon neglected the property but it sounds like the Eastsiders stopped shopping at the mall even when it was full with all of the national retailers that you want to come back to the mall. I used to work at the Dick's at Washington Square and I know for a fact it's the worst performing Dick's in the Indianapolis market. You better start shopping there before it closes also.

  3. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

  4. If you only knew....

  5. The proposal is structured in such a way that a private company (who has competitors in the marketplace) has struck a deal to get "financing" through utility ratepayers via IPL. Competitors to BlueIndy are at disadvantage now. The story isn't "how green can we be" but how creative "financing" through captive ratepayers benefits a company whose proposal should sink or float in the competitive marketplace without customer funding. If it was a great idea there would be financing available. IBJ needs to be doing a story on the utility ratemaking piece of this (which is pretty complicated) but instead it suggests that folks are whining about paying for being green.

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